Negotiable Devices Act, 1881 – Supreme Courtroom Half Yearly Digest Jan – Jun, 2026
Negotiable Devices Act, 1881 – Part 138 – When an organization or NGO authorises a selected particular person to signal and problem cheques on its behalf, together with the duty of creating funds below an settlement, such individual is handled because the ‘drawer’ of the cheque and attracts prison legal responsibility below S. 138 NI Act, upon dishonour. The Treasurer of an NGO, who was appointed because the authorised signatory to execute an MoU, signal cheques, and make funds to the respondent, was the ‘face’ of the organisation and solely answerable for the implications of the dishonoured cheque. The Courtroom clarified that the legal responsibility arises when the situations below Part 141 NI Act are glad, even for authorised signatories. Mere designation as an authorised signatory doesn’t robotically absolve private legal responsibility if the individual is the one who truly signed the cheque and was entrusted with the fee obligation. Reliance on Shri Gurudatta Sugars Advertising Pvt. Ltd. v. Prithviraj Sayajirao Deshmukh (2024) was held to be misplaced within the information of this case. The conviction was upheld; nevertheless, contemplating the appellant was solely the Treasurer, the sentence was modified. The appellant was directed to pay a tremendous of ₹1.5 crore to the respondent (TSSPDCL) inside two months, with default rigorous imprisonment of 1 12 months. Okay. Ranganayakulu v. State of Telangana, 2026 LiveLaw (SC) 605 : 2026 INSC 555
Negotiable Devices Act, 1881 – Parsharvanath Weld Wires v. State of Chhattisgarh, 2026 LiveLaw (SC) 585
Negotiable Devices Act, 1881 – Sections 138 and 141 – Offences by Corporations/Societies – Vicarious Legal responsibility of Workplace Bearers – Scope of Quashing below Part 482 of Cr.P.C. – Mere designation as an workplace bearer of a society/firm is inadequate to draw vicarious legal responsibility below Part 141 of the NI Act within the absence of particular averments disclosing an energetic function within the conduct of its enterprise affairs – a hyper-technical strategy ought to not be adopted whereas construing a grievance. If the grievance, learn as a complete alongside the documentary materials on file, discloses a adequate factual basis and prima facie participation of the workplace bearers within the underlying monetary transactions (resembling being signatories to the MoU, cheques, or promissory notes), the prison proceedings can’t be quashed on the threshold – within the absence of any particular factual basis connecting an workplace bearer to the transaction past a common assertion of their official standing, prosecution in opposition to such individual can’t be sustained – Held that the Excessive Courtroom erred in quashing the proceedings in opposition to respondents 1, 2, and 4 (Vice-President, Treasurer, and Supervisor) whose energetic involvement was prima facie established by their signatures on the monetary paperwork/cheques associated to the transaction – the quashing of proceedings in opposition to respondent No. 3 (Govt Member) was justified as no particular function or signing of paperwork was attributed to him past a common assertion of his designation – Attraction partly allowed. [Relied on S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another (2005) 8 SCC 89; National Small Industries Corporation Limited v. Harmeet Singh Paintal and Another (2010) 3 SCC 330; Ashok Shewakramani and Others v. State of Andhra Pradesh and Another (2023) 8 SCC 473; S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan (2023) 10 SCC 685; Paras 28 – 42] Mansi Finance v. M. Lalitha, 2026 LiveLaw (SC) 559
Negotiable Devices Act, 1881; Part 138 & Part 141 — Insolvency and Chapter Code, 2016; Half III (Sections 96, 101, 124, 128) — Code of Felony Process, 1973 (Part 357) / Bharatiya Nagarik Suraksha Sanhita, 2023 (Part 395) — Interaction between Particular person Moratorium and Cheque Bounce Proceedings – Core Rules Enunciated by Supreme Courtroom – i. Predominantly Felony Character of Part 138 – Though arising out of an inherently civil dispute or transaction, the “deeming fiction” below Part 138 of the NI Act attaches strict prison legal responsibility as a measure of public coverage and deterrence to preserve industrial integrity. It can’t be handled on par with a mere civil restoration mechanism; ii. Tiered/Bifurcated Strategy to Part 138 – Proceedings below Part 138 should be bifurcated into two tiers – Tier-I (Felony Side) which is necessary and outcomes in private prison legal responsibility (imprisonment or tremendous); and Tier-II (Compensatory Side) which is a discretionary train of energy below Part 357 CrPC / Part 395 BNSS aimed toward sufferer reparation; iii. Inapplicability of Moratorium on Felony Side (Tier-I) – The interim moratorium below Part 96 and statutory moratorium below Part 101 of the IBC (Half III) don’t remain the prison side of Part 138 proceedings – Legal responsibility to pay a tremendous is an “excluded debt” below Part 79(15)(a) of the IBC, and the moratorium can’t be used to evade private prison accountability; iv. Applicability of Moratorium on Compensatory Side (Tier-II) – The moratorium provisions below Half III of the IBC apply strictly to the compensatory side of Part 138 – If a prison court docket adjudicates that compensation is payable, the restoration and enforcement of such compensation in opposition to the debtor or his property should be briefly halted in the course of the moratorium interval to stop the depletion of the asset pool and permit respiratory area; v. Vicarious Legal responsibility of Administrators Present process Private Insolvency – The place a company entity can’t be proceeded in opposition to on account of a authorized snag, the private prison legal responsibility of its Administrators below Part 141 survives – if such a Director is present process private insolvency or chapter below Half III of the IBC, the expression “any debt” below Sections 96 and 101 is broad sufficient to incorporate the statutory compensatory legal responsibility shifted onto him – whereas the prison trial in opposition to the Director continues, the restoration of any ordered compensation from him or his properties stays stayed below Sections 96, 101, 124, and 128 of the IBC – Discovering a deep-seated systemic battle between the literal procedural mechanisms and the overarching social goal of penal deterrence below the NI Act, the Division Bench referred the matter to the Hon’ble Chief Justice of India for structure of a three-judge Bench to conclusively decide the exact penal orientation of Part 138 and the precise extent of moratorium protections relevant over it. [Relied on P. Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC 258; Rakesh Bhanot v. Gurdas Agro Private Limited, (2025) 6 SCC 781; Ajay Kumar Radheshyam Goenka v. Tourism Finance Corporation of India Ltd., (2023) 10 SCC 545; Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth, (2025) 4 SCC 629; Paras 141-185, 186 – 211] Dineshchand Surana v. UCO Financial institution, 2026 LiveLaw (SC) 555 : 2026 INSC 579
Negotiable Devices – Delay in Presentment – Part 75A of the Negotiable Devices Act, 1881 – Whereas delay in presentment is excused if attributable to circumstances past the holder’s management (such as a strike), the presentment should be made inside a “cheap time” as quickly as the reason for delay ceases to function – The financial institution’s failure to behave on the fast working days following the strike precluded the safety of Part 75A. [Paras 56] Canara Financial institution v. Kavita Chowdhary, 2026 LiveLaw (SC) 375 : 2026 INSC 363
Negotiable Devices Act, 1881 – Part 141 – Vicarious Legal responsibility of Administrators – Important Averments – Held, merely being a Director of an organization is inadequate to make a individual liable below Part 141 – It’s a vital requirement to particularly aver within the grievance that, on the time the offence was dedicated, the accused was in command of and answerable for the conduct of the enterprise of the corporate – Signing a Board Decision relating to main directional points doesn’t ipso facto proof involvement within the day-to-day administration of the affairs of the firm. [Paras 6 – 8] Saroj Pandey v. Govt of NCT of Delhi, 2026 LiveLaw (SC) 349 : 2026 INSC 324
Negotiable Devices Act, 1881 – Reverse Onus Clause – Held: Part 139 is a reverse onus clause included to enhance the credibility of negotiable devices – It’s compulsory for the Courtroom to lift this presumption as soon as the factual foundation (issuance/execution of the cheque) is established – Dismissing a grievance earlier than trial on the bottom that the debt was not legally enforceable, with out permitting the complainant to steer proof, ignores the statutory mandate – The Supreme Courtroom put aside the orders of the Periods Courtroom and Excessive Courtroom, restoring the grievance.. It held that because the signatures and issuance weren’t disputed, the existence of a legally enforceable debt is a matter of trial. [Relied on Rangappa v. Sri Mohan, 2010 INSC 289; Rajesh Jain v. Ajay Singh, 2023 INSC 888; Paras 8-11] Renuka v. State of Maharashtra, 2026 LiveLaw (SC) 338 : 2026 INSC 327
Negotiable Devices Act, 1881 – Part 138 and 139 – Dishonour of Cheque – Legally Enforceable Debt – Rebuttal of Presumption at Pre-trial Stage – Held: On the stage of issuance of course of, the Courtroom is barely required to see if the fundamental elements of Part 138 are prima facie glad, together with the issuance of the cheque, its dishonour, and the service of statutory discover – As soon as the drawer doesn’t dispute the signature or the issuance of the cheque, the statutory presumption below Part 139 comes into play, shifting the burden to the drawer to show that the cheque was not issued for a legally enforceable debt – This rebuttal is an train to be undertaken in the course of the trial by proof and can’t be dislodged in a abstract method on the pre-trial stage. Renuka v. State of Maharashtra, 2026 LiveLaw (SC) 338 : 2026 INSC 327
Negotiable Devices Act, 1881 – Part 138 – Dishonour of Put up-dated Cheques – Presumption of Dishonest – Dishonour of a post-dated cheque by itself isn’t adequate to presume the existence of a dishonest intention on the time of issuance – Put up-dated cheques are sometimes issued to discharge current or future liabilities and don’t carry a illustration of adequate funds on the time of issuance – Whereas dishonour might set off proceedings below Part 138 of the NI Act, it doesn’t ipso facto quantity to dishonest below Part 420 IPC until dishonest intention is proved from the beginning. [Relied on Iridium India Telecom Ltd. v. Motorola Inc. (2011) 1 SCC 74; Vesa Holdings Private Limited and Another v. State of Kerala and others (2015) 8 SCC 293; Paras 12-20] V. Ganesan v. State, 2026 LiveLaw (SC) 269 : 2026 INSC 265 : AIR 2026 SC 1547
Negotiable Devices Act, 1881 – Part 138 – Code of Felony Process, 1973 – Sections 372 and 378 – Attraction in opposition to Acquittal – Proper of Complainant as ‘Sufferer’ – Battle of Judgments – Reference to Bigger Bench – The Supreme Courtroom noticed a battle between a latest co-ordinate Bench resolution in Celestium Monetary vs. A. Gnanasekaran (2025 INSC 804) and earlier choices in Satya Pal Singh vs. State of M.P. and Subhash Chand vs. State (Delhi Administration) relating to whether or not a complainant in a Part 138 NI Act case should search particular depart to enchantment below Part 378(4) CrPC or can enchantment immediately as a ‘sufferer’ below the proviso to Part 372 CrPC. Everest Cars v. Rajit Enterprises, 2026 LiveLaw (SC) 155
Negotiable Devices Act, 1881 – Part 138 – Separate Reason behind Motion – Held {that a} separate reason behind motion arises upon every dishonour of a cheque, offered the statutory sequence of presentation, dishonour, discover, and failure to pay is full – The truth that a number of cheques come up from a single transaction doesn’t merge them right into a single reason behind motion – As soon as a cheque is issued in discharge of legal responsibility and subsequently dishonoured, a presumption of legal responsibility in favour of the complainant arises – The burden of proving the absence of a debt or legal responsibility lies with the accused and should be discharged in the course of the trial – Famous that the Excessive Courtroom, whereas exercising energy below Part 482, should keep away from conducting a “mini-trial” or usurping the operate of the Trial Courtroom when disputed factual questions exist – The Supreme Courtroom put aside the Excessive Courtroom’s discovering that sustaining two separate complaints for a similar underlying debt (one for private cheques and one for agency cheques) amounted to parallel prosecution – held that because the devices have been distinct, drawn on completely different accounts, and offered on completely different dates, the legislation does not bar separate prosecutions – Questions relating to whether or not cheques have been issued as various securities or in substitution of 1 one other are combined questions of reality that can not be resolved on the threshold below Part 482 – Famous that statutory weight should be given to the presumption below Part 139 – Quashing proceedings prematurely overlooks this authorized presumption which operates in favor of the complainant. [Relied on State of Haryana and Others vs. Bhajan Lal and Others, 1992 Supp (1) SCC 335; Neeharika Infrastructure Private Limited vs. State of Maharashtra and Others, (2021) 19 SCC 401; Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. and Others, (2000) 2 SCC 745 M.M.T.C. Ltd. and Another vs. Medchl Chemicals and Pharma (P) Ltd. and Another, (2002) 1 SCC 234; Paras 26-45] Sumit Bansal v. MGI Builders and Promoters, 2026 LiveLaw (SC) 34 : 2026 INSC 40
Negotiable Devices Act, 1881; Part 138 and 142(1)(b) – The Supreme Courtroom put aside an order of the Karnataka Excessive Courtroom that had handled the sequence of condoning delay and taking cognizance as interchangeable or a “curable irregularity” – Famous that below the proviso to Part 142(1)(b) of the NI Act, the energy to take cognizance of a grievance filed after the prescribed interval is expressly topic to the complainant first satisfying the Courtroom that there was adequate trigger for the delay – Held that an order taking cognizance earlier than the delay is formally condoned is legally unsustainable and satisfaction of the Courtroom relating to adequate trigger for delay should precede the act of taking cognizance of a belated grievance – Supreme Courtroom made following Findings: i. Necessary Sequence: The satisfaction of the Courtroom relating to “adequate trigger” ensuing within the condonation of delay should precede the act of taking cognizance; ii. Irregularity not Curable: Held that Excessive Courtroom’s view that taking cognizance earlier than condoning delay is a “curable irregularity” isn’t in protecting with the statutory mandate of the proviso to Part 142(1)(b); iii. Impression of Misrepresentation: famous that the respondent (complainant) contributed to the procedural error by erroneously stating in her grievance that it was filed inside time – Attraction allowed. [Relied on Dashrath Rupsingh Rathod vs. State of Maharashtra and another (2014) 9 SCC 129; Paras 13-15] S. Nagesh v. Shobha S. Aradhya, 2026 LiveLaw (SC) 13 : 2026 INSC 27 : 2026 1 Crimes (SC) 12
